Plastic Omnium - 2018 Registration Document

4 2018 CONSOLIDATED FINANCIAL STATEMENTS Consolidated financial statements at December 31, 2018 PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 147 The cost of downsizing plans is recognized in the period in which a detailed plan is drawn up and announced to the employees concerned or their representatives, thus creating a well-founded expectation that the Group will implement this plan. Provisions for pensions and other post-employment 1.1.19 benefits All Group employees are covered by pensions and other long-term post-employee benefits plans. Pension plans comprise defined contribution plans or defined benefit plans. DEFINED CONTRIBUTION PLANS 1.1.19.1 The cost of defined contribution plans, corresponding to salary-based contributions to government-sponsored pension and death/disability insurance plans made in accordance with local laws and practices in each country is recognized as an operating expense. The Group has no legal or implicit obligation to pay additional contributions or future benefits. Consequently, no actuarial liability is recorded under these defined contribution plans. DEFINED BENEFIT PLANS 1.1.19.2 Defined benefit plans mainly concern post-employment benefit plans, which are defined by: other pension and supplementary pension plans, mainly in the US and ● France; plans to cover healthcare costs in the US. ● Defined benefit plans are subject to provisions for staff benefits calculated on the basis of actuarial valuations carried out by independent actuaries using the projected unit credit method. These assessments take into account assumptions on: retirement dates determined according to the terms of the legislation ● and in particular for French employees, a voluntary retirement assumption when full benefit rights have been acquired; mortality; ● the probability of active employees departing before retirement age; ● estimates of salary increases up to retirement age; ● discount rates and inflation. ● When defined benefit plans are funded, the commitments under these plans are deducted from the market value of plan assets at the reporting date. The valuation builds in long-term profitability assumptions of the invested assets calculated on the basis of the discount rate used to value company commitments. Changes in provisions for defined benefit obligations are recognized over the benefit vesting period, in the income statement under “Operating expenses”, except for: the effect the reversal of discounting of the commitments recognized in ● financial expenses; actuarial gains and losses on post-employment benefit obligations ● recognized in equity. OTHER LONG-TERM BENEFITS 1.1.19.3 Other long-term benefits correspond to long-service awards for French employees. Actuarial gains and losses on “Other long-term benefit plans” (mainly long-service awards) are recognized immediately in profit or loss. Government grants 1.1.20 The grants received are recognized as liabilities in the balance sheet; they correspond to grants to finance investments in new sites, production equipment or Research and Development programs. The grants are reclassified in gross profit over the periods and in the proportions in which the acquired assets are depreciated. Treasury stock 1.1.21 Treasury stock is recorded as a deduction from equity, regardless of the purpose for which it is being held. The proceeds from the sale of these securities are recorded directly as an increase in the Group’s equity, any gain or loss on the sales have no impact on the income statement for the year. Share-based payment 1.1.22 Options granted under employee share purchase and subscription plans (at December 31, 2018 there are no stock option plans) are measured at their fair value at the date of grant by the Board of Directors, using the Black & Scholes option pricing model. The fair value is recognized in “Employee benefits expense” on a straight-line basis over the vesting period, with a corresponding adjustment to reserves. When options are exercised, the cash amount received by the Group for the exercise price is recorded in cash and cash equivalents with a corresponding adjustment to consolidated reserves. Financial assets (excluding derivatives) 1.1.23 LONG-TERM INVESTMENTS: EQUITY AND FUND 1.1.23.1 Long-term investments also correspond to shares in listed companies as well as to shares subscribed for in venture capital funds and companies. On the acquisition date, they are measured at fair value plus transaction costs directly attributable to their acquisition. In accordance with the new IFRS 9 standard, effective January 1, 2018: changes in the fair value of listed companies are accounted for using ● the alternative method provided for by IFRS 9 in “Other comprehensive income in equity” (OCI) without recycling in profit or loss; changes in long-term investments in mutual funds and mutual funds ● are recognized in profit or loss. The impact of the application of this standard is not material for the Plastic Omnium Group. OTHER FINANCIAL ASSETS 1.1.23.2 Other financial assets include loans, security deposits and surety bonds. They are measured at amortized cost. Whenever there is objective evidence of impairment, i.e. a negative difference between the carrying amount and the recoverable amount, an impairment provision is recognized through profit or loss. This impairment may be reversed if the recoverable amount subsequently increases.